A Better Approach to Regulating Provider Network Adequacy

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Health care reforms, including those put in place by the Affordable Care Act, are making insurers more competitive. However, in their effort to lower costs, health insurers more often are selling health plans that cover fewer hospitals, and many fewer physicians. This narrowing of provider networks is a sign that market reforms may be improving consumer value, but network narrowing also raises a number of concerns. For example, a narrow network may have insufficient capacity to serve the number of people enrolled, or the providers may be too geographically dispersed to be reasonably accessible.

Rules dictating the adequacy of care in these networks have been in place for several decades, but state and federal regulators have begun to assess whether these rules are suited for the modern conditions.

In “A Better Approach to Regulating Provider Network Adequacy” (PDF), Mark Hall and Paul B. Ginsburg argue that the current set of regulations are not sufficient to ensure network adequacy without placing undue constraints on market innovation. Instead, the authors argue that a more layered approach is needed, including a form of patient-specific [or case-specific] dispute resolution.

This layered approach to network adequacy consists of the following recommended eight elements:

A general qualitative standard for network adequacy is needed

Insurers should provide reasonably up-to-date and user-friendly network directories, and network size should be more clearly labeled for consumers.\

Some basic baseline quantitative standards should be considered that are fairly easy to administer, such as a minimally acceptable number of higher-volume providers in the major areas of primary care and specialty practice, and at least one such provider within a defined distance of most of the plan’s enrolled population.

Quantitative standards should be presumptive, but not conclusive.

If quantitative standards are adopted, consideration should be given to maximum wait times (rather than simply number and distribution of providers).

Regardless of the substantive adequacy standards in place, a backstop dispute resolution process is also needed to protect patients who might face inadequate access due to a restricted network.

Patients should be held financially harmless when a reviewer determines there are grounds to receive care out of network.

If network adequacy requirements might add substantially to the cost of insurance, then states should consider creating an additional dispute resolution process focused on financial implications.

The authors conclude that a robust dispute resolution process can ease the administrative burden of overseeing network adequacy. “Nevertheless, well-designed regulation of network adequacy is not easy to achieve. Because no single regulatory approach is likely to be sufficient, we need to think more in terms of a layered approach – one that thoughtfully melds together different dimensions and techniques of oversight.”